inostrani kapital kao faktor razvoja zemalja - Ekonomski fakultet u ...

desirable, to accelerate the recovery from the first two phases of fiscal discipline
and price liberalization, even before financial institutions were fully liberalized.
For that reason, ‘transition’ economies did experience, in reality, a much more
differentiated pattern of financial and industrial liberalization. Either because they
had to choose a ‘less than optimal’ sequence, for practical and political reasons,
and/or because any step of the sequence was often conducted in parallel, at varying
speed and intensities. So the final results were quite different, all along the 90ies, in
terms of patterns (albeit much less so in terms of final outcomes) 10 . By the end of
the century, most CEE had ended their period of blood and tears, and started to
take off, well endowed of foreign capital. Yet, a great deal of turbulence
characterized all emerging economies, who had liberalized their financial markets.
So another old question emerged, i.e. whether ‘financial’ liberalization should
precede, or rather follow, ‘real capital’ liberalization.
From a macro-economic perspective, external finance liberalization would be
advisable - it was argued - under two considerations. In case of trade deficit (a
normal initial condition): 1) it would allow the country to pay for its bills, induce
currency depreciation, and thus absorb excessive demand; and 2) it would raise
interest rates and thus prompt domestic savings. A certain liberalization of foreign
banks could also improve, if assisted by appropriate surveillance, the development
of the domestic financial sector, imposing discipline on macro-economic policies
and eventually generating efficiency gains among domestic banks by exposing
them to external competitors. Unfortunately, these benefits would be only obtained
in the long run. In the short run, the substitution of former institutions (albeit
inefficient) might expose the country to financial instability and to the risk of
loosing control over monetary and fiscal policies, as a sudden capital out-flow
might take place. So, if a government wants to introduce external finance
liberalization, without running the risk of capital reversal, it should make sure that
foreign capital will be channeled productively into the economy by putting in place
a well-developed and well-supervised financial sector, good institutions and sound
macroeconomic policies. Furthermore, if a government wants to let foreign
financial capital to precede FDI, it should also make sure that domestic industries
will be able to up-grade and recover by their own, being a lack of savings their
only constraints. Both elements require the capacity and the willingness of the
government to pursue economic development in the first place, and set up the
socio-economic conditions to do so. This issue will be expanded in Section 3.
In any case, even with sound macro-economic policies and ‘market friendly’
institutions, the possibility that capital liberalization would foment financial crisis
by incurring in sudden stops of capital inflows and current account reversal cannot
be ruled out in principle. Although there is no systematic evidence that countries
with higher capital mobility tend to be more exposed to financial crisis than
countries with lower capital mobility (Edwards, 2005), a sudden reversal of
international capital flows seems more likely to occur among countries that relay
10 See Tiberi Vipraio (1999) for a discussion.
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